Facebook crypto chief defends Libra project amid claims the corporate has an excessive amount of power

A bit more than two weeks after announcing plans
for a cryptocurrency known as Libra,
Facebook’s top executive on
the project is reiterating that the
corporate won’t be in control of it.

“Facebook won’t management the
network, the currency, or the reserve backing it,” wrote David
Marcus, the head of
the company’s blockchain group, in a blog post on Wednesday.

“Facebook can only be one
among over 100 members
of the Libra Association by launch. We will not have any special rights or privileges.”

Marcus also explained that Facebook’s wallet for Libra, known as Calibra, will be just one of many wallets, however admitted that Facebook will gain business advantages overall from making it easier for people to use Facebook services
to transfer money.

The need to reiterate these points after only two weeks suggests Facebook will have an uphill battle getting individuals to trust it with something so sensitive
as their finances.

It additionally highlights
a basic contradiction in the project: whereas Facebook designed
Libra under great secrecy and oversaw its
announcement, the corporate intends to turn management over the cryptocurrency to a body of partners. At
launch, those partners included non-profits, credit card companies and payment brokers,
among others, however up to now major financial institutions have stayed away. The transition of control might not be
successful if Facebook can’t convince partners there’s a reason to join.

It’s also not immediately obvious
why Facebook undertook the ambitious project
of designing a completely new digital
currency, instead of simply creating a payment system that works in conjunction with
Facebook merchandise. There
are many other examples of tech corporations facilitating
payments, like Apple Pay and PayPal’s Venmo, that allow individuals transfer cash electronically without requiring them to convert it to and from a new kind of currency.

Marcus addressed this by saying that Libra’s great promise is to
assist those who are
poorly served by the current banking
system, particularly those
in developing countries.

“With Libra, anyone with a $40 smartphone
and connectivity will have the flexibility to securely safeguard their assets,
access the globe economy, transact at a much lower price, and over time access an entire range of financial services,”
he wrote. “We firmly believe that if Libra is successful, it can be a
non-linear step change for
billions of individuals who need it the most.”

The novelty and ambition of the concept doesn’t appear to be discouraging investors: Facebook stock is
up regarding 4-dimensional since the corporate announced Libra.